I hope you enjoyed my earlier article Want to Sell your House? Here is step 1- Decision making.
Once you have taken decision to sell your home then next step comes should I sell it as it is or sell it after renovation. My suggestion is to renovate and then sell. Because many contractors buy cheap old homes and sell on high rates after good refurbishment.
How to reach on decision to renovate or not to renovate:
Some house upgrades come with a high return on investment and some major overhauls sometimes do not ensure better value. For example, something as small as installing a new entry door or touching up exterior paint may increase your home value compared with an overhaul of the interior.
The majority of people prefer move-in ready homes. This is mainly because they do not want to engage any major renovations, even if this implies spending more time searching for the perfect house.
If you want to make as much money as possible from your house for sale, then you will most likely pick up any sort of renovations and hope that they’ll increase the value of the house.
One of the many dilemmas facing sellers is whether to renovate before listing their home. This question crosses the mind of nearly every homeowner as they begin the process of getting their house ready to sell. Unfortunately, this isn’t a simple yes or no question, and it can take some time to determine whether it’s worth renovating or not.
Several factors come into play, and it’s important to weigh the pros and cons carefully. Below, we’ll go through the most important factors you’ll need to consider in order to make an informed decision.
What is the State of Your Home?
First and foremost, you need to work out what state your home is in. Do you own a turnkey house that is ready for a new owner to move into without having to do any work? Or do you own a house that has some major problems and is in urgent need of major repairs?
If your property requires a lot of modernization – maybe it hasn’t been touched since the 1980s and needs a complete overhaul to appeal to certain buyers – think twice before renovating. This is obviously a personal decision, but taking on a large renovation can unveil a series of issues that could turn your home into a money pit. The tactic here might be to leave your home as is and reduce the price based on the need for renovations. While you won’t be able to sell for as high, it could be a savvy financial decision in the long run.
It’s a good idea to have the value of your home appraised in advance so that you know what you’re working with. A home inspection is another good idea, and with a professional taking a look over everything, you can be sure that you’re aware of any potential issues. Both of these services can be pricey, but they prevent any nasty surprises during the sales process.
Define Your Target Audience
Begin thinking of your home as a product: Which demographic will it target? What will the future buyer want from it? For example: if your house was designed with a family in mind, is less than 2,000 square feet and is in a quiet residential sub-division with good schools, your target audience is more than likely young families. This could mean the prospective buyer would want a turnkey home. If the buyer has a young child, they may not want to go through the renovation process and would rather pay a little extra for a space they can move into right away. If you think this is the case, then consider renovating, as you should see a good return on your investment. It is worth thinking about your target audience too, at your house’s current value, and at minor repairs that you could do without breaking the bank.
Keep an Eye on the Market.
Another aspect to consider is the state of the property market. Is it a seller’s or buyer’s market? Ask your realtor for input: he or she should be able to inform you on how the market is performing in your area. This will help guide your decision. If the market is in favour of sellers, then increasing your home’s value by renovating might be the right move.
Overall, it is safe to say that there are a lot of things that you should take into account when thinking of renovations or remodeling!
The question of “Should I renovate my house before selling?” requires more calculated thinking purely based on ROI and the marketability of your home in its current condition.
You’re ready to list your home for sale…then you look around. Maybe you’ve spent time and money updating the exterior of the house but the interior is still in serious need of attention. Maybe there’s dry rot, or maybe it’s just outdated.
This is one of those questions where the answer depends on variables. What’s the condition of competing homes for sale? Is it a hot, cold, or neutral real estate market? What’s the likelihood of a return on your investment?
Many sellers put way too much money into fixing up their homes before listing them for sale. They repair flaws that a buyer might never notice or just won’t pay extra for.
Talk to your agent before making any repairs to weigh the pros and cons with your particular home and your personal situation.
What is home staging ?
Home staging is the term used in the west means to prepare a house for sale in the real estate market.
We in Pakistan call it RENOVATION in real estate market. It is tedious work and consumes time and money. So many people avoid it. The purpose of this article to enlighten the importance of home staging. Why, here the main reasons.
In my experience it is worth investing time and money in renovations. You can make your property more attractive and competitive in the market and that has many advantages.
Calculation of the exact value of a property is a factor encompassing a lot more than just the price of land and the structure built over it. The feel and vibes you get when you are there do count for something. Small renovations, facelifts, and touch-ups here and there can have a major impact on how much the buyer is willing to pay for it. Sometimes, the decisive factor can be an emotional connection that may appeal to potential buyers when it’s time to make an offer.
If your real estate market is extremely hot—it’s a seller’s market—you can usually get away with fewer fix-ups before selling. But a home that needs repairs will still deliver a lower price in any market. Buyers might not even bother to look at a home that needs work in slow markets. Your agent has their thumb on the market pulse, so ask for advice.
If you think this is the case, then consider renovating, as you should see a good return on your investment. Another aspect to consider is the state of the property market. … If the market is in favour of sellers, then increasing your home’s value by renovating might be the right move.
You can sell quickly.
In real estate, time is money. A buyer usually surveys a lot of homes before finally reaching a decision. If you want to decrease the time your house remains on the market, you need to make it stand out among all the options a buyer has. Consider a hypothetical scenario: a potential buyer visited two homes with almost the same features in the same locality. One has a clutter of things lying around here and there, and the other is well-decorated according to a particular theme. Do you think the properly organised home will face much competition?
In a real estate transaction, time is most definitely money. The longer a home sits on the market, the better the chances that the homeowner will end up taking less than planned to get it sold.
The most common reason a home doesn’t sell is that it’s overpriced. Second to that, however, are homes that aren’t in decent condition.
Keep in mind that the first week that the house is on the market is known in the industry as “the honeymoon period.” This is when new listings receive the most attention and the more people that view the home, the quicker it will sell.
A recent study from a large real estate analytics firm finds that homes get four times as many visitors in the first week they’re on the market than they do one month after listing. With repairs and cosmetic fixes out of the way, your home may be the belle of the real estate market during that first week.
The ready-to-move-in feel can be critical
Perhaps the biggest reason home staging works is that it gives the buyer the peace of mind that there isn’t a lot to be done before moving in. Making finishing touches can take a lot of time and many buyers are willing to pay a little extra to avoid it. This can also be the difference between a closed deal and an almost-closed one.
Selling the home “as It is” also works for people who can’t afford to renovate. Should you spend more time and money on fixing it up or just try to sell it as is?
Still, depending on the circumstances, you may not have enough time for renovations. In this case, you’ll probably have time only for general cleaning and painting the interior and exterior.
Another option is to sell your house “as is” to an investor. You’ve heard of these contactors and old home buyers to buy your house for cash instantly. The catch has always been that you’d have to sell your house for a steep discount to get this type of offer, but what you may not realize is that today’s direct-buy investor market has been stirred up by the fact the they will sell that house after renovation.
They are fixers-and-flip who will buy your house to turn it around for a profit.
In short, if you want to sell your house as it is, then you have to make sure that it doesn’t lack something that would drastically decrease its value. Naturally, if you don’t want to invest any money, then you shouldn’t worry about renovations.
On the other hand, if you want to renovate and hopefully increase its value, then you should research the market and make sure that you’d get a decent return on investment!
What’s Your Market?
Next, you’ll need to work out who exactly will be interested in your home. What kind of market is it? In a seller’s market, you might get away with not making too many renovations to your home. However, in a slower buyers’ market, potential buyers will be more demanding. It’s very important that you do your research and work out which way the market is going in your area.
Depending on the state of your home, you might market it to buyers that are looking for a fixer-upper — mostly contractors and flippers. Bear in mind that it’ll command a lower price, but if you’re happy with that, you can avoid doing any renovations. If there’s a demand for fixer-uppers in your neighborhood, it’s worth knowing.
On the other hand, if more buyers are looking for a house that’s ready to go, or with just minor repairs needed, you need to bear that in mind. In this case, it can be a good idea to carry out the necessary renovations.
Balancing the Cost
With an idea of who’s looking at your home, you can start to weigh your options. Many people think that they’re guaranteed a return on their investment, and, ideally, you will be able to add renovations to the price of your home, but this isn’t always the case. Remodels hardly ever have an equal return on the initial investment.
Often, it’s better to spend less on cosmetic renovations, and bear in mind that most owners will want to put their own stamp on the place.
Making it Work
Most of the time, it comes down to what you want to get from selling your home. If there’s a lot to be done, but you’d rather move out quickly and not spend the extra money getting it up to scratch, prepare to sell for a lower price. On the other hand, if you want to get a decent price for your home, it’s worth fixing up any major problems that are likely to put buyers off, such as much-needed roof repairs.
Large repairs should be tackled with caution, as you may discover a whole host of other issues that need addressing during the process, which can turn your renovations into a money pit. Think carefully about whether you can afford this or if it might be better to take a hit on the sale price.
Ultimately, most buyers are happy to work on minor projects they feel they’ll be able to tackle themselves to make your house their home. So, there’s no need to go overboard on renovating your home to the highest standard. Ensure it’s clean and neutral, and ideally without any major repairs, and most people will be happy to make a good offer.
Speak with your agent before taking on any major renovations and get their professional opinion. They’ll help you understand the market and what you can do to get the best price for your home.
What are the risks of renovating?
As mentioned above, one of the biggest risks when renovating is over-capitalisation. Over-capitalisation is when you spend far more on the renovation than the property will correspondingly increase in value.
For example , you decide to upgrade the kitchen, bathroom, and then get a bit carried away and move some walls around to create an additional living room.If you do over-capitalisation and you’d have to wait for quite a few years if you wanted to get your money back when you sold it.
Another major risk is the fact that most renovations take much longer than planned. This can be because workmen are busy on other projects or there are unexpected waiting periods for new appliances for the kitchen.
The most successful renovators create detailed budgets and stick to them, but they also include contingency funds for cost and time over-runs.
They also understand the value of using professionals who will complete tasks efficiently and to a higher standard that they could do themselves.
Some tips for renovating to add value and avoid over-capitalisation include:
Set a budget (and don’t go over it)
Look for low cost improvements – e.g. new light fittings, a fresh coat of paint, new fixtures, etc.
Connect with agents and find out what homebuyers are looking for in your area
Add space and functionality – whether it’s knocking down walls, adding better lighting to make a room seem brighter, or building storage spaces like wardrobes to make a room feel less cluttered.
It’s vitally important to also understand what adds value and what does not.
On the other hand, one of the smartest and most cost-effective renovation tricks is painting. It is amazing what a coat of paint can do to transform the interior of a home with little more than elbow-grease required.